alexa External Debts and Economic Growth in Nigeria: An Empirical Study Using Autoregressive Distributed Lag Model
ISSN: 2151-6219

Business and Economics Journal
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Research Article

External Debts and Economic Growth in Nigeria: An Empirical Study Using Autoregressive Distributed Lag Model

Olasode OS and Babatunde TS*

Department of Economics, Lagos State University, Yaba, Lagos, Nigeria

*Corresponding Author:
Babatunde TS
Department of Economics
Lagos State University, Yaba
Lagos, Nigeria
Tel: 2349036394764
E-mail: [email protected]

Received Date: May 17, 2016; Accepted Date: June 16, 2016; Published Date: June 23, 2016

Citation: Olasode OS, Babatunde TS (2016) External Debts and Economic Growth in Nigeria: An Empirical Study Using Autoregressive Distributed Lag Model. Bus Eco J 7:239. doi: 10.4172/2151-6219.1000239

Copyright: © 2016 Olasode OS, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.




This paper models some economic theories which explained the casual relationship between accumulated funds/ loans from external sources (external debts) and economic growth with a more focus on Nigerian economy, as it is a usually trend for debts of third world and developing countries debts profile to be high, and this case is also the same with Nigeria as the country debts profile is on the increase once more after the debt cancellation of 2005 by the Paris Club of creditors. Also in the innovation by this study is the used of the Autoregressive Distributed Lag (ADL) model to capture the effect of externals debts on viability and growth Nigerian economy from 1984-2012. The preliminary and normality tests shows that the variables are positively skewed but are not normally distributes, while the econometric tests of Stationarity (Unit Root Test) and Co-integration Tests conform that all the variables exhibit Stationarity at first differenced and the existence of long-run relationship between the variables was also confirmed by the Johansen Cointegration test carried out. The result from the ordinary least squares method used confirms the existence of a dual behaviour as the lag 1 of external debts has positive while external debts of present year posed a negative effect on the performance of the economy. The recommendations are Nigeria government should ensure that debts incurred are channel towards productive uses and debt management office of the government should strengthen its plans and foster appropriate use of loans in the critical area the need for is identified.


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